RJR Nabisco Inc. (Formerly R.J. Reynolds Industries, Inc.) and Consolidated Subsidiaries - Page 45

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          benefits while the former give rise only to long-term benefits.             
          The experience of our predecessor, the Board of Tax Appeals, and            
          other courts in an earlier era lead us to doubt the sharpness of            
          that distinction.10  Moreover, no case distinguishes between                
          advertising execution and campaign expenditures, and the long-              
          term, short-term distinction respondent would draw is                       
          incompatible with section 1.162-1(a) and 20(a)(2), Income Tax               
          Regs., and Rev. Rul. 92-80, 1992-2 C.B. 57.  Respondent’s                   
          distinction will not hold; the litigated expenses are advertising           
          expenditures that are ordinary business expenses.                           
               Because we have concluded that the litigated expenses are              
          ordinary business expenses on the grounds stated, we need not               
          address petitioner’s alternative theories that the litigated                
          expenses are recurring expenses or are deductible under section             
          174.                                                                        

          10    See, e.g., Northwestern Yeast Co. v. Commissioner, 5 B.T.A.           
          232, 237 (1926), discussed supra sec. I.C.3., and quoted in part            
          as follows:                                                                 
                    Generally and theoretically, therefore, it is safe                
               to say that some part of the cost of a campaign or                     
               system of promotion may be of permanent significance                   
               and may be regarded as a capital investment rather than                
               a deductible expense. But how far in a given case the                  
               recognition of this doctrine may require the                           
               capitalization of some expenditures and the charging                   
               off of others is hard to say.  Clearly, when the                       
               question is submitted for judicial consideration, it                   
               may not be answered ab inconvenienti by an arbitrary                   
               rule.                                                                  






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